Namibia, KDB, Russian Standard, Polarcus Samur sell notes as E.U. deal spurs big rally

By Christine Van Dusen

Atlanta, Oct. 27 - Emerging markets bond issuers swung into action on Thursday, inspired by news of a European Union agreement on tackling its members' long-standing and crushing debt problems, which spurred a rally and tightened spreads.

Among the issuers to price new deals during the session were Namibia, Korea Development Bank, Russian Standard Capital plc and Dubai-based Polarcus Samur.

In the European Union's new plan, private banks will make a 50% contribution to the debt reduction, big banks will get a capital boost, and the European Financial Stability Facility will be expanded to provide guarantees for as much as $1.4 billion in bonds issued by financially troubled countries.

"After rallying hard, going into the E.U. summit, confirmation of the latest European [news] has brought an incredible wave of tightening," a London-based trader said.

He pointed to Ukraine, at more than 60 basis points tighter early Thursday, and the 30 bps narrowing seen for Russia's quasi-sovereign bonds. Russia's Vimpelcom saw its 2022 notes trading at 95.5, up 21 points in three weeks, while most Russian corporates were 50 bps tighter.

And Turkey was 25 bps tighter, despite weaker-than-expected trade balance numbers. Turkey-based Akbank's 2018s, meanwhile, were getting squeezed and were trading flat to the lender's 2015s.

"You have to hand it to all the new issue buyers demanding, and getting, hefty new issue discounts when the reality is clearly that the market is horribly underweight and reaching for paper on marginal news," a trader said. "It's a rally of biblical proportions. The scale of demand has been amazing."

IPIC launches deal

Moves in the Middle East and North Africa were a bit more controlled, with most names between 15 bps and 20 bps tighter, a trader said.

But the big news from the region was that Abu Dhabi-based IPIC GMTN Ltd. launched a $3.75 billion three-tranche offering of notes due 2017, 2022 and 2041.

The deal includes $1.5 billion notes due March 2017 that launched at Treasuries plus 262.5 bps, $1.5 billion due March 2022 that launched at Treasuries plus 312.5 bps and $750 million notes due March 2041 that launched at Treasuries plus 350 bps.

"It's receiving a great response," a source close to the deal said Thursday morning. "That's helped by some generous initial guidance."

Barclays Capital, Goldman Sachs, JPMorgan, Mitsubishi UFJ Securities, Natixis and Societe Generale are the bookrunners for the Rule 144A and Regulation S deal.

"All of the roadshow feedback was concern about the near-$5 billion in funding needs in the next two years," a trader said. "But that's not so much of a problem when the order book was nearly three times that for one deal. But it's unsurprising when you have a chance to buy paper 40 bps cheap to an unchanged curve when the rest of the region is 20 bps tighter."

Namibia sells bonds

Meanwhile, South Africa's bonds were about 15 bps tighter, making them a relative laggard, another trader said.

In other news from Africa, Namibia priced $500 million 5½% notes due Nov. 3, 2021 at 98.119 to yield 5¾%, a market source said.

Barclays Capital and Standard Bank were the bookrunners for the Rule 144A and Regulation S deal.

"This looks like a steal at 5¾%, which is only just inside Nigeria's 2021s, which explains why it was up 1 point in the gray," a trader said.

Said the London trader, "Plenty of issuers are looking to take advantage of the new mood."

KDB, Russian Standard price notes

South Korea's Korea Development Bank priced a $1 billion issue of 3 7/8% notes due April 4, 2017 at 99.549 to yield 3.967%, or Treasuries plus 280 bps, a market source said.

Bank of America Merrill Lynch, Credit Suisse, Daiwa Capital Markets, Goldman Sachs, KDB Asia and Mizuho Securities were the bookrunners for the Securities and Exchange Commission-registered deal.

Proceeds will be used for general operations, including extending foreign currency loans and repayment of debt.

And Russian Standard Capital plc priced a $150 million issue of six-month European commercial paper to yield 8½%, a market source said.

UBS and VTB Capital were the bookrunners for the Regulation S deal.

Proceeds from the notes - guaranteed by Russian Standard Bank, a private consumer lender - will be used for general corporate purposes.

Polarcus Samur prints bonds

Dubai-based marine geophysical services provider Polarcus Samur has placed NOK 230 million of 14% three-year senior unsecured bonds, according to a company press release issued on Thursday.

DnB NOR Markets, Pareto Securities and SEB Merchant Banking were the bookrunners.

The proceeds will be used to refinance bonds and for general corporate purposes.

Turk Eximbank sets talk

In other news on Thursday, export credit agency Export Credit Bank of Turkey (Turk Eximbank) set price talk for its planned $500 million issue of five-year notes at mid-swaps plus 437.5 bps, a market source said.

Barclays Capital, Citigroup, Commerzbank and ING are the bookrunners for the deal.

"The guidance is flat to Isbank and circa 200 bps over Turkey's 2016s," a trader said. "We're seeing sellers of Isbank 2016s on the back of this. Turk Eximbank isn't 100% government-owned, supports 8% of Turkish imports and doesn't have any reserve requirements. Given the good protection in the covenant package and the implicit government support, we believe this quasi-sovereign issue is attractive."

Poland plans bonds

Thursday also saw the Republic of Poland planning a dollar-denominated issue of benchmark-sized bonds due 2021, according to a press release from the Ministry of Finance and a filing with the SEC.

Citigroup, Deutsche Bank and HSBC are the bookrunners for the deal.

Proceeds will be used for general financing purposes.

"The transaction will be executed in the near future," according to the press release.

ICBC mandates leads

In other deal-related news, Beijing-based lender Industrial and Commercial Bank of China Ltd. mandated HSBC, ICBC International, Bank of China, Credit Suisse, DBS Bank and Goldman Sachs as the bookrunners for a renminbi-denominated offering of notes, a market source said.

The notes will be distributed under Regulation S.

And Hong Kong's Bank of East Asia set price talk for its planned dollar-denominated issue of benchmark-sized notes due in 10.5 years at Treasuries plus 450 bps to 475 bps, a market source said.

Deutsche Bank and UBS are the bookrunners for the Regulation S notes, which are non-callable for 5.5 years.

The coupon will be reset to a fixed rate equal to the prevailing Treasury rate on the first call date plus the initial spread.

Codelco taps bookrunners

From Latin America, Chile's state-owned copper mining company Corporacion Nacional del Cobre de Chile (Codelco) mandated HSBC and Mitsubishi UFJ Securities for a dollar-denominated issue of benchmark-sized notes due 2021, a market source said.

Proceeds from the Rule 144A and Regulation S transaction will be used to finance capital expenditures and refinance liabilities, as well as for general corporate purposes.

Paul A. Harris contributed to this article

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